(Adds comments from China Strategic on plans to resubmit application and expectation of final approval in three months)
By Jessie Ho and Aries Poon
Of DOW JONES NEWSWIRES
TAIPEI -(Dow Jones)- Taiwan's government has turned down an application by a consortium led by China Strategic Holdings Ltd. (0235.HK) to buy American International Group Inc. (AIG)'s Taiwanese unit because of the lack of some documents, although the Hong Kong-based company said Thursday it plans to resubmit its application to the island's regulators.
In AIG's biggest sale since it started raising funds to repay billions of dollars in U.S. bailout money, China Strategic Holdings and Primus Financial Holdings Ltd. agreed in October to pay US$2.15 billion for Nan Shan Life Insurance Co. But the deal had met with regulatory hurdles because the winning bid didn't have a local partner as well as comments from Taiwanese lawmakers professing concern that the winning bidders involved Chinese interests.
"We rejected the (first) application last week because some needed papers are missing," Emile Chang, deputy executive secretary of Taiwan's Investment Commission, said Thursday.
Chang said more documents are needed after this deal.
As the seller, AIG also needs to jointly file the application, he said. The application was filed by Primus Nan Shan Holding, a company set up by Primus Financial Holdings Ltd. and China Strategic.
China Strategic Chief Executive Raymond Or said at a press briefing Thursday, however, that the application by the company and Primus was returned and not rejected because of the missing documents.
He said the company plans to resubmit its application to Taiwan's regulators shortly, adding he expects final approval in about three months.
Or, who was formerly vice chairman of Hang Seng Bank Ltd., said he and China Strategic Chairman Frederick Ma will meet with Taiwan regulators next week about the Nan Shan deal.
Or also stressed that the group wasn't linked to China.
"China Strategic's shareholders aren't holders of mainland Chinese passports," Or said.
On Tuesday, in an apparent move to facilitate regulatory approval, China Strategic said it planned to sell a 30% stake in Nan Shan to local financial conglomerate Chinatrust Financial Holding Co. (2891.TW), in exchange for a 9.95% stake in the Taiwan financial conglomerate.
A spokesperson for AIG said the company understands the regulatory authorities asked for more information before they would formally accept the completed application.
"We also understand that this is a routine request, and look forward to continuing to work with the regulators toward a successful close of the transaction," the spokesperson said.
China Strategic said Thursday the deal remains subject to further negotiations, adding the company intends to take control of Nan Shan, "either directly or indirectly." It didn't elaborate.
After collecting all the papers, the commission will submit the application to the legislature for approval as lawmakers will need to check if there's Chinese investment in China Strategic, Chang said.
Taiwan's laws prohibit Chinese companies and individuals from holding controlling stakes in Taiwanese companies in most industries, including insurance.
-By Jessie Ho and Aries Poon, Dow Jones Newswires; 88622 502-2557; jessie.ho@dowjones.com
(Jeffrey Ng contributed to this article.)
(END) Dow Jones Newswires
November 19, 2009 05:47 ET (10:47 GMT)